THE VICE PRESIDENT: Thank you. Thank you all very much. A welcome like
that is almost enough to make me want to run for office again. [Laughter.]
Almost. Almost. But it's a pleasure as always to have a chance to come
visit the U.S. Chamber of Commerce. I appreciate the invitation to talk to
this fine organization and the board members here today. Although many of
you are from elsewhere, you've probably heard the saying about this city
that: "If you want a friend in Washington, get a dog." Just to cover
myself, I got two.

But I'm happy to relate that the saying isn't really true, that I do have
friends in Washington, and among them is Tom Donohue. Presidents come and
go - but not at the Chamber of Commerce. [Laughter.] Tom's been on the
job for better than a decade, and he remains one of the most effective
advocates for the free enterprise system in the entire country, and I'm
proud to call him my friend.

I'm delighted to have the chance to say a few words today about the
economy, especially to this audience. I'll be relatively brief so we'll
have time for a few questions at the end.

For my part, I'm greatly interested in the economy - and that's not because
in seven months I'll be out of work. It's because I believe that our
country has greater wealth-creating potential than ever before, and that
with the right policies, we can create jobs and prosperity for our people
on an historic scale.

In the last seven years alone, despite unprecedented challenges to this
country, we have added more than two trillion dollars to our Gross Domestic
Product - an amount exceeding the entire economy of Canada. And even with
the recent headwinds - rising prices for food and gas, turmoil in the
credit markets, and a major correction in housing - this economy has
continued to grow. The world is changing around us, and new and powerful
economic players are stepping onto the global stage. Yet ours remains the
largest, most vibrant, most flexible economy. To keep that edge, we've got
three big economic decisions to make. We need to make them soon, and we
need to get them right.

The first decision is on taxes. Earlier this year, with the economy
needing a boost, President Bush asked the House and the Senate to pass an
immediate stimulus package. They responded quickly and on a bipartisan
basis - and now more than 150 billion in rebates and business incentives
are going to the taxpayers and into the private economy.

Members of both parties agreed that swift tax relief would be a good thing,
and they were right. It follows that the opposite action - a sudden, major
tax increase - would be the wrong prescription for our economy. But that
is precisely what is set to occur in the not-too-distant future. In six
months we'll be to the beginning of 2009, and the year after that, the Bush
tax cuts passed by Congress in our first term, will expire under the
language of the law. Letting the tax cuts expire would hit Americans with
a 280-billion-dollar per year tax increase.

The death tax, which Congress voted to eliminate, would return with maximum
force, at a peak rate of more than 50 percent. The top tax rate on capital
gains would go up by one-third. The top rate on dividends would more than
double. For couples, the marriage penalty would reappear in its old
discriminatory form. For parents, the thousand-dollar per child tax credit
would be cut in half, down to 500 dollars. The tax rate for every single
income tax bracket would be increased. On average, some 116 million
Americans would see average tax increases of 1,800 dollars a year.

Most of us in our lifetimes have seen bad economic news, either in the
headlines or in our personal circumstances. But not many of us have taken
a hit like an overnight income tax rate increase of 50 percent. But that's
what is coming for some of our fellow citizens - and they happen to be the
ones at the bottom. If the Bush tax cuts are allowed to expire, Americans
in the lowest tax bracket would take the biggest hit.

Understandably, politicians who promise to get rid of the Bush tax cuts
don't want to get into these details. They also neglect to point out that
ending the tax cuts would hike the total Federal tax burden to about 20
percent of our Gross Domestic Product - nearly the highest ever. That
would be a staggering burden on the nation's households, and it would throw
discredit on the lawmakers who permitted government greed to reach that
level.

For the economy as a whole, ending the Bush tax cuts would put intense
downward pressure on potential growth; restrict the amount of capital
available for startups; and leave small firms with fewer resources to
expand and hire new workers.

In fact, the tax increase doesn't even have to take hold to have a negative
impact. As one of the biggest government money-grabs in American history
seems to draw closer, even the expectation of it is going to have an
effect. The longer Congress fails to act, the greater the uncertainty
among entrepreneurs, investors, and venture capitalists. Ever more
projects will go undone; ever more job-creating prospects will be postponed
or shelved.

There is a nearly endless stream of well reasoned and justified complaints
about the federal tax code. It's too big and too complicated and it's
hugely anti-competitive. For example, the corporate tax rate today, 35
percent, is the second-highest in the developed world - a persistent,
indefensible disadvantage for American firms in the global marketplace.
But in one small area, the case for the status quo is unassailable: We must
preserve the tax cuts delivered by President George W. Bush. [Applause.]

The second big economic decision concerns global trade and investment. The
question is whether our country will preserve a free-trade consensus built
up over a generation - or give in to the false comforts of protectionism.

Here, too, the question is a practical and urgent one. Right now Congress
has before it a free trade agreement with Colombia, which has been in the
works for a number of years. It has a strong base of support in both
parties, and for good reason. At present, more than 90 percent of what we
buy from Colombia already enters America duty-free, while much of what we
try to sell to Colombia goes in with tariffs of 35 percent or more. The
Colombian government has agreed to lift the tariffs and level the playing
field for American imports - and that includes everything from farm produce
and tractors to high-tech equipment and motorcycles.

The problem with getting this agreement passed is that the House Democratic
leadership has refused to bring it to a vote. They've even changed the
rules of the House in order to keep it off the floor. And so, today and
every day, about 8,000 American companies that export to Colombia are
facing obstacles that not even the Colombians want them to face.

The agreement has national security implications as well. President Uribe
of Colombia is an ally of the United States - a man of courage who has
stood up to terrorists and to regional dictators. He has worked with us on
the trade issue in complete good faith, as all the world has seen. If the
Democratic leadership in Congress persists in blocking the agreement; the
result will be a tremendous setback for one of our closest allies in Latin
America, severe damage to our nation's credibility in the region, and a
boost of confidence for demagogues who want to subvert democratic values in
our own hemisphere. Prime Minister Harper of Canada has put it this way:
"If the United States turns its back on its friends in Colombia, this will
set back our cause far more than any Latin American dictator could hope to
achieve." For its part, Canada has moved forward, and last Saturday
concluded negotiations for its own Colombia Free Trade Agreement.

President Bush has noted that other leaders have asked him why the Congress
won't do something as simple as pass a free trade agreement with a close
friend like Colombia. When they ask that, the President said, "the tone of
amazement passes, then there's a tone of concern about the United States
becoming protectionist."

In response, the President tells these leaders that "politics is too strong
right now" in the United States. And he's clearly correct about that.
We've just seen the end of a primary season in which candidates for the
presidency spoke the language of protectionism. We even heard pledges to
undo existing treaties - solemn agreements put down in writing and duly
ratified by the Senate. Some politicians seem determined to unravel the
bipartisan consensus on free trade - a consensus epitomized by the North
American Free Trade Agreement, which was proposed by Ronald Reagan,
negotiated by George Bush, and finalized by Bill Clinton.

In a time when even NAFTA is being called into doubt - when candidates can
draw cheers by denouncing trade deals with our next-door neighbors - then
we're at risk of going down a very destructive path. And the timing could
hardly be worse. Last year alone, 40 percent of the growth in America's
economy - let me repeat that, 40 percent of the growth in America's economy
- was due to exports. And openness to foreign investment has given the
United States the flexibility it needs to deepen the capital stock and
increase productivity.

America is good at many things, and commerce and competitiveness are among
them. Much of the world is getting into the same game. Now more than
ever, we need to engage the global marketplace, and allow trade and
investment to flow freely into our economy. Protectionism is the refuge of
a tired, fearful nation - and that is not the United States. It's time to
renew our confidence and seek a world that trades in freedom, led by a
secure and optimistic United States of America.

Confidence should also be the watchword when it comes to energy policy.
And that's the third economic decision we need to get right. By almost any
goal you have in mind - whether it's lower gas prices, a stronger economy,
national security, or greater energy independence - it all points in the
same direction: We must produce more energy right here in the United
States.

With crude oil already over 130 dollars a barrel and gas at four dollars,
everyone in elected office ought to explain what solutions they have in
mind for bringing the cost down, or at least slowing the trend. And if
they're honest about it, they'll end up talking about increasing supply.

Twenty, forty, or fifty years from now, I'm pretty sure this country will
have energy sources that are more diverse and environmentally sound than
many of us can even imagine today. A good deal of credit will belong to
President Bush for giving unprecedented support to developing alternative
and renewable fuels, and the engine technology to use those fuels with high
efficiency. These are tremendously promising fields. And the United
States, driven by a combination of market forces, concern for the
environment, and our own native ingenuity, has chosen to lead the way.

I'm also confident that our nation will find sensible ways to address
long-term concerns about carbon emissions. President Bush has outlined the
principles for a solution - an approach that offers reasonable incentives
and gives strong support to technology research. The cap-and-tax
legislation, however, that was debated in the Senate last week was exactly
the wrong way to address carbon emissions.

That bill would have effectively increased taxes by about a trillion
dollars over ten years, raised the price of gas and electricity, and killed
manufacturing jobs, and all of this while having no significant effect on
the climate. No fewer than ten Democratic senators wrote to their leaders
to make clear they could not support final passage of the bill. On the
Republican side, Senator Jim Inhofe and others rightfully insisted that the
bill be debated in full. That was enough to put the bill on the path to
defeat - and for that, I think all Americans can be grateful.

Meanwhile, in the here and now, we are an economy that runs on petroleum -
some 20 million barrels of it a day. That can and will change over time,
but it will be a very long time. It will not change overnight. We'd be
doing the whole country a favor if more of that oil were produced here at
home, with the money going into American pockets and supporting American
jobs. Yet on Capitol Hill, many have ignored the obvious and have stood in
the way of more domestic energy production. You can't even call them
shortsighted, because they fail to see the immediate, day-to-day needs of
the economy.

It's my own view that we should be drilling in ANWR in an environmentally
responsible way, which could increase our daily domestic oil production by
as much as a million barrels a day. As for other locations, George Will
pointed out in his column the other day that oil is being drilled right now
60 miles off the coast of Florida. But we're not doing it, the Chinese
are, in cooperation with the Cuban government. Even the communists have
figured out that a good answer to high prices is more supply.

Yet Congress has said no to drilling in ANWR, no to drilling off the East
Coast, no to drilling off the West Coast, no to drilling off Florida.
Given the high prices Americans are now paying, we should hear no more
complaining from politicians who've stood in the way of increasing energy
production inside this country. They are part of the problem.

And it's not just crude oil or natural gas production that's being held up.
We also have to import ever larger amounts of refined gasoline, because we
don't have enough refining capacity to satisfy our own demands. We haven't
built a new refinery in the United States in three decades. It's high time
we did so. There's not a reason in the world that our gasoline should not
be made right here in the United States, at American refineries, by
American workers.

In each of these areas - taxes, trade, and energy - the choices we need to
make soon are going to have an enormous impact on our way of life. As
board members of the Chamber of Commerce, you know this because all of you
deal with major economic issues every day, not as abstractions, but as
practical, real-world concerns. You know better than most how public
policy can help private enterprise, or harm it. And with great decisions
at hand, the nation's policymakers need your voice, your input, your
experience, and your wisdom.

I'm sure you agree with the President that in times of challenge the best
thing to do is to go to our strengths. And America's greatest economic
strengths are the free market and the entrepreneurial spirit. If we make
the choice to face the world with confidence, and turn loose the greatness
of our free enterprise system, our nation will thrive and prosper as never
before.

Thank you very much. [Applause.]

MR. TOM DONOHUE: Mr. Vice President, that was a great talk. I was
prepared to stand up and ask you some questions about when are we going to
start to drill for the stuff that we have and we need. Perhaps, and what
you had to say is exactly what we believe, and going to be pushing forward
with our energy institute here as these elections begin to move forward.
Because of your experience in the industry, which sometimes in this town is
not respected, perhaps you could just extend your remarks a little bit
about where we can best put that pressure. Where are the weak spots for us
to probe and see if we can get some results in the Congress?

THE VICE PRESIDENT: I think that's a key question, Tom. A few years ago,
I think it was '95, the Congress passed legislation authorizing the
development of ANWR. The Alaskan National Wildlife Reserve was
established, as I recall, back in about 1979 or 1980. I was relatively a
junior member of the House in those days, serving on the Interior
Committee, we considered and reported and passed the legislation. And as I
recall we set this area up as a wildlife reserve because that was less
restrictive than if we designated it a wilderness. And the reason we did
that was because it was believed that there were energy resources there
that we might someday want to develop for the country, and therefore we
designated it, as I say, as a wilderness reserve.

In '95 Congress said let's open it up and go develop it and, of course,
Bill Clinton vetoed it. And that was some 12 or 13 years ago. Today, if
we had, in fact, followed through on what the Congress wanted to do then we
would have roughly a million barrels a day is the estimate; but certainly
that would be a positive impact on today's situation.

The frustration I sense, and I think a lot of people sense, I'm all for
pursuing new technologies. I think we ought to invest in new, more
efficient engines, and hybrid and electric and hydrogen, and all the
technologies you can think of out there, we need to obviously see what can
be developed.

One of the benefits, frankly, that we'll see I think now given the current
situation of the market is a lot of those will get a push because of the
basic fundamental economics of it.

But we have to recognize that there isn't anything out there that is going
to get us away from a hydrocarbon economy any time in the near future.
We've got a huge hydrocarbon resource. We've got an enormous
infrastructure that's been built up over a century. That's the way our
economy operates. That's the way the world economy operates basically.
And at this point, there really isn't anything on the horizon that today is
economic relative, for example, to basic good old oil and gas.

And the solution for us in the near term, near term being over the next few
years, is to increase production. But we have, as a nation, had in place
now for many years set up policies that limits our ability to produce those
products in the United States. We put a cap on what we're able to produce.
Now that was a choice that was made by previous administrations and
previous Congresses. That was a time, obviously, when gasoline cost a lot
less than four dollars a gallon.

Today, we're in a situation where we're supposed to go out and scream and
yell at folks who are producing and try to get them to produce more while
we aren't willing to produce all that we have here at home ourselves.

The situation is such that I think with the pressures that Congress is
feeling now because of prices, I think the tremendous adverse impact that a
lot of this is having on the American people, it's just a huge -- for
somebody out there who's living close to the edge or living on a fixed
income, or having to live from paycheck to paycheck all of a sudden to get
hit with a doubling of the price of gasoline is a major blow. And I think
Congress has got an obligation to act and I think at the heart of that
strategy needs to be the basic proposition that we want to increase the
supply of domestically produced oil. And I think if we do that, we're not
going to produce all we need, we're still going to be dependent on imports,
but we could go a long way towards moderating the current situation in the
marketplace. Instead, we've got a lot of people running around looking for
scapegoats and the legislation that was defeated this week in the Senate,
for example, windfall profits tax, it's not going to produce a single
additional barrel of oil. We tried it. Jimmy Carter put on a windfall
profits tax in 1980 and the Congressional Research Service, non-partisan,
bi-partisan, not linked to any industry concluded that that period from
1980 to 1988 that windfall profits tax reduced our overall production. You
do not get more of something by taxing it higher, and that's just a basic
fundamental law of economics and that's still valid here.

So we can do it. We've got the technology to do it. Our technology these
days in terms of developing and producing oil and gas in an environmentally
safe and sound manner is unbelievable. We can do all kinds of things: deep
water, off-shore, and directional drilling. You know, Katrina hit
Louisiana and one of the amazing things that happened down there that never
got reported was we didn't have any oil spills; no pollution, if you will,
of the environment as a result of one of the worst natural disasters in
history, in an area that is absolutely smack-dab in the heart of our
producing country. So we can do it. We can do it in a sound and safe
manner. We just need serious effort and I think the recognition that, for
far too long, too many politicians have advocated all kinds of other
courses of action without facing up to the basic fundamental fact that
today we have a hydrocarbon economy and if you're going to have cheap,
affordable energy available in the amounts it needs to be to run our
economy, you're going to have to produce more of it.

Q Mr. Vice President, my name is Jim Wordsworth; McLean, Virginia. You
were just in our restaurant last month and I appreciate that. [Laughter.]
He was.

THE VICE PRESIDENT: It was pretty good food, too.

Q Anybody who didn't hear that? [Laughter.] Looking back over the past
eight years, what do you believe have been the most important achievements
of the Administration and any disappointments, if you think there have been
any?

THE VICE PRESIDENT: Most important achievements of our administration,
well, I would point to what we've done with respect to the global war on
terror. I mean, when we ran in 2000 and I remember signing on with the
President, we had a number of issues we were focused on. We wanted to
strengthen national defense. We wanted to improve our educational system,
No Child Left Behind. We wanted to cut taxes. We thought it was important
to reduce the overall tax burden on the American people. We had budget
surpluses at that point and we didn't want government to take any more
money than it needed. That's sort of the basis upon which we ran and I
think we were able to deliver on most of those. We got the education
program passed; the tax package passed finally in '03, for example; and put
in place a lot of those cuts that I talked about here today. So I feel
good about that. What we did not anticipate when we ran, obviously, was
9/11. And what 9/11 represented was, sort of, the culmination, if you
will, of a series of attacks on Americans and American interests that went
back a good 10 years. Certainly the first World Trade Center bombing in
'93, Kobar Towers in '96, the East Africa embassy bombings in '98, U.S.S.
Cole in 2000. Of course on 9/11 what happened was we ended up with the 19
terrorists here in the United States here in Washington and New York and a
field in Pennsylvania, murdered nearly 3,000 Americans. And that was
significant in many respects partly because it showed that virtually
anybody who wanted to be objective about it that terrorism wasn't a law
enforcement problem; that it was, in fact, a strategic threat to the United
States; that what al Qaeda represented required a strategic response from
us. And I would put foremost among what we accomplished as an
administration the President's judgment and then decision that we then
acted upon and have implemented. That, since it was a strategic threat,
that we needed to martial all of the elements of strategic power to deal
with it and try to defeat it. Military force, our intelligence
capabilities, law enforcement when that was appropriate, go after the
terrorists themselves, go after the state sponsors of terror, go after
those who provided safe harbor and sanctuary to terrorists, who provided
them with the weapons for deadly technologies they might use to attack us.
That was a big shift.

A part of that were a set of decisions the President made with respect to
defending the homeland. That if we were going to be able to fend off or
disrupt or defeat attacks like 9/11 we had to do a much better job
especially in terms of collecting intelligence on what our adversaries had
planned for us. And we did that in three major ways. One, we passed the
Patriot Act, which gave to our folks the same tools for prosecuting
terrorism that we already were using for Narco traffickers. Second was the
Terrorist Surveillance Program that let us monitor international
communications and capture the content and the fact of communications
between al Qaeda related individuals or organizations overseas and people
here in the United States.

And third was the program we put in place with the CIA that let us build
and operate an effective interrogation program of high-value detainees; a
handful of individuals, men like Khalid Sheikh Mohammed who we captured in
the summer of '03 who was the mastermind of 9/11; the man, who more than
any other, was responsible for killing 3,000 Americans that day. You just
saw within the last couple of weeks he's going to trial now down in
Guantanamo. We needed an interrogation program that was fully consistent
with our Constitution; fully consistent with our treaty obligation and the
laws of the land; but also let us collect intelligence from some very hard
cases; relatively few in number, specifically who could tell us about al
Qaeda, about where they operated from, about what their plans were for the
future. And we did that, and we did it with all of the legal requirements
met and satisfied. We do not torture. We didn't torture then. We don't
torture now. But we did have an effective program for interrogating, let's
say this handful of individuals that we captured during the course of the
global war on terror.

I'm convinced that that combination of things, from the Patriot Act to the
Terrorist Surveillance Program and an effective program for interrogating
detainees that we've saved thousands of lives. And it is not an accident
that it's been now nearly seven years since 9/11 and we haven't been hit
again. Because we know they're trying. We know they've been out there
trying. You all may remember the plot to capture airliners after they left
Heathrow and blow them up over the United States. There's a continuing,
on-going effort on the part of al Qaeda to find ways to get at us and to
kill more Americans. And so far they have failed in every single instance.
That's because of some very good decisions made by the President of the
United States backed up with good support in the Congress and implemented
and carried out by our military personnel and our intelligence and law
enforcement people.

But I would point to that fact as being right at the top of the list. I
also would say Mike Hayden who's the director of the CIA, gave last week I
believe, it was an extensive interview to the Washington Post. I'd
recommend it to you because Mike, who was a career Air Force officer, he's
not a Republican or Democrat; he's not partisan in any fashion, but he's
been in the battle up to his eyeballs from the very beginning. He was the
director of the National Security Agency on 9/11. He's been directing the
CIA now for a couple of years. He gave a rundown on where we are with
respect to the battle with al Qaeda and the war on terror. It's very
positive because we've had an enormous impact on it.

But we can't let up for a minute and we've got now -- it's become a
partisan issue. Frankly, the Democrats in the House have refused to renew
the authorization for the Terrorist Surveillance Program. We've been
working on that for months but our capabilities are somewhat reduced today
because Congress won't give us the same authority that we operated under up
until February when it expired. We've had fifty-some members, Democratic
members, of the House this week sign a letter demanding a special
prosecutor to investigate those of us who had responsibilities in the
administration when the detainee program was put in place -- interrogation
of al Qaeda suspects.

So there are, you know, it's unfortunately got to the partisan point. I
think it's fair to say, and I'd offer it up, I think one of the most
important decisions we're going to make in this election is whether or not
we're going to have a President and a Congress who will be committed to
pursuing an aggressive prosecution of the global war on terror.

And that means that we succeed and finish what we're doing in Afghanistan
and Iraq and that we do whatever's necessary to defend the American people
here at home. We can do it. We've proved it now for the last seven years
and the next government, both the legislative and executive branches will
be tested in terms of whether or not they're willing to continue on that
vein or buy into the proposition that somehow we ought to dismantle it all
and that we shouldn't be doing what we're doing. I think we did exactly
the right thing and I plan to do everything I can to defend it.

Thank you. [Applause.]

THE VICE PRESIDENT: That's a high note to end on. Well, let me thank all
of you again for the great work you do for the Chamber and on behalf of all
of us. The Chamber has been a tremendous organization over the years, and
I'm delighted always to have an opportunity to work with you and to
participate in your worthy enterprises.